Russ Solomon's dream of a record supermarket set the
groove for today's music megastores.

Russ Solomon is the president and founder of Sacramento,
California-based MTS Inc., the corporation that owns Tower
Records--a company that racked up sales of just under $1 billion
last year. He is also living proof that anyone with a clear and
innovative marketing concept--and the passion to make that dream
come true--can transform their concept into a reality.

Ply him with intelligent questions about his record empire and
he'll spin a saga spanning 28 years that not only chronicles
the rise of his trend-setting entrepreneurial empire, but the
growth of the modern recording industry.

Solomon enjoys coming off as a regular guy who just happened to
be in the right place at the right time. But that's only part
of the story. When "Flower Power" swept the nation in the
mid-'60s, Solomon, who was in his 30s at the time, fantasized
about opening a "record supermarket," a megastore selling
everything from Wagnerian opera to psychedelic rock. So began the
Tower concept, and the ascendance of a pioneer record chain which
now boasts 120 national and 61 overseas stores. Yet there's a
lot more to Tower's story than luck and timing.

While Solomon strikes the pose of the laid-back and freewheeling
entrepreneur, a couple of the time-tested secrets of his success
were patience and persistence. "I've been in the record
business for 55 years," he chuckles. "That's not what
I call `overnight success.' There was no secret formula. I just
kind of did it. I climbed up the hill by putting one foot in front
of the other." Unlike many successful entrepreneurs who built
their companies on elaborate business plans and calculated visions,
Solomon had no clear direction when he started. "It was all
kind of seat-of-the-pants; I just kind of took things as they
came."

He does admit to entertaining visions of selling different kinds
of music, catering to people's diverse tastes. His dream grew
out of a deep love of music which can be traced to his mid-teens,
when he sold 78 rpm records in a corner of his father's drug
store, the Tower Cut-Rate Drug Store in Sacramento.

Yet Solomon cavalierly plays down his modest start in the record
business. "Forget all the stuff you've read about
entrepreneurs working around the clock and entertaining the grand
fortune-making visions they've had since they were kids,"
he says. "When I was a teenager, I couldn't see beyond the
next 24 hours. Girls and listening to music were my biggest
priorities."

School certainly wasn't high on his list, either. Unlike
many famous entrepreneurs who are embarrassed about having quit
school to build their fortunes, Solomon boasts about being kicked
out of school. "I was bored and didn't go to class,"
he says. "I certainly didn't have any big plan up my
sleeve."

The young Solomon did demonstrate a flair for merchandising,
however. Working the record counter in his father's store, he
bought used jukebox records for 3 cents and sold them for a dime.
When 45 rpm records were introduced, he gave away $6 worth of
singles to each customer who bought a 45 rpm record player for
$12.95, thus building an audience for the new singles.

Before he got serious about record retailing, Solomon tried
junior college for a few months, then joined the Army. After his
discharge, he went back to selling records in his father's drug
store.

In 1952, the 26-year-old Solomon took over his father's
record inventory and opened a music wholesaling, or rack-jobbing,
operation. "A rack-jobber sells discount records in
mass-merchandise stores," he explains. "I quickly
discovered that you can't make a profit if you're
undercapitalized." After eight years of lacking the funds to
beef up his inventory, distributors moved in and liquidated his
business. He shrugs it off as a learning experience: "I was
humbled, but not defeated. I came away more determined than
ever."

In 1960, he borrowed $5,000 from his father and reopened his
business under the MTS corporate banner in his father's
drugstore. A month later, he opened a second Tower Records store.
"The record-retailing business suddenly made a lot of
sense," he says. "It was just a question of building an
inventory and selling it."

By 1967, he had opened two Tower Records stores in Sacramento.
At 42, married and with two children, Solomon realized his grand
vision of a supermarket-style record store. In March of 1968, he
took a five-year lease on an enormous vacant storefront at San
Francisco's Fisherman's Wharf and opened his first San
Francisco Tower Records. He filled 6,000 feet of space with records
from all over the world. Prior to that, records were sold in small
stores with limited selections in major categories. "As soon
as the store was stocked," he says, "I realized this was
the only way to sell records."

With the opening of that first sprawling store, featuring
colorful, six-by-six-foot paintings of record covers as window
displays, Solomon had opened what he felt was the ideal record
store for music lovers, a veritable smorgasbord of listening
pleasures.

The new store was an instant success, attracting serious record
buyers from all over the state. If Tower didn't have an obscure
record in stock, Solomon promised to find it. And, by monitoring
the output of tiny, obscure record companies and wholesalers, he
usually did manage to find those hard-to-get items, scoring lasting
points with music cognoscenti.

With the success of the San Francisco store, Solomon once again
became excited about his business, and dreamt of growing even
bigger. "What better time to be in San Francisco?" asks
Solomon, fondly remembering those exciting times. "Woodstock
was a year away and the music scene was bursting with new
music."

Two years later, in 1970, Solomon opened his second superstore
on Sunset Strip in Los Angeles. Over the next decade, he opened 26
more stores in major cities across the country.

When video became hot in 1981, Tower began selling and renting
videos. By the early 1990s, Solomon had expanded his product line
to include books and CD-ROMs. But it's still music, now on
compact discs, that accounts for the bulk of Tower's sales.

Solomon has taken his record supermarket concept to new heights.
"In the early years, our biggest obstacle was not having
enough capital," he says. "Today, we have the track
record to strike good banking arrangements." With plenty of
capital, he spares no expense in renovating and designing stores,
which range in size from a modest 3,600-square-foot location in
Sonoma, California, to Tower's largest store (53,000 square
feet) in Tokyo.

However, Solomon encounters more competition each year. With 181
stores worldwide, he finds himself surrounded by copycats. His
biggest competitor is Minneapolis-based Musicland Group Inc., with
a whopping 1,472 stores and 1995 revenues of $1.72 billion. Despite
their size, Solomon says he doesn't lose any sleep over them.
After all, he was first. More importantly, Solomon is convinced he
offers his customers a unique and more eclectic selection.
"We're the best," he asserts, immodestly.

Being the best means mastering the art of competitive retailing,
something Solomon has been doing all of his life. "I was doing
it when I ran the record counter in my dad's drug store,"
he says. "I'm still doing it today, but on a much larger
scale."

Solomon has never strayed from his original retailing concept,
which is "giving the public lots of stuff that they want at a
price they want to pay." He explains, "That's what
good retailing is all about."

Even deep discounters like Wal-Mart, K-Mart and Price Club
don't faze Solomon. "We can compete with anybody," he
says, insisting that his success also rests with smart buying and
creative handling. "Nobody can buy records cheaper than we
can."

More upsetting to Solomon are changes in the industry.
"Music has become a commodity, and everyone is trying to feed
from the same trough," he says. "Besides the discounters,
a lot of the electronics retailers, like Circuit City and Best Buy,
and booksellers like Borders Books and Music, have jumped into the
market as well."

Solomon forecasts an industry shakedown over the next few years.
"Some of the companies will go away," he speculates.
"The good ones will get bigger." Despite a crowded
marketplace, Tower consistently manages to rack up a 15 percent
annual revenue growth rate.

"The business is exciting because music never stops
coming," he adds. "There is more variety and more
accessibility to music than ever before."

Solomon spends most of his time overseeing new business
developments, but has little to do with the day-to-day running of
the company. His management philosophy encourages Tower managers to
do their own thing. Solomon calls it the "Tom Sawyer School of
Management." According to his interpretation of the classic
tale, "It's based around doing as little as possible. Just
like Tom Sawyer had the good sense to hire Huck Finn to paint his
fence, my secret is to hire good people and let them do what they
do best." (What does it matter if Solomon rewrote Tom
Sawyer to suit his own purpose?)

Solomon explains that Tower was built using what he calls a
horizontal management concept: "I'm involved in one way or
another with everything Tower does, but I'm not autocratic to
the point where they can't do things without me. The management
team can do everything they need to do without me. I like to be
informed, but they don't need my permission. Many decisions are
made at the store level."

The general operation is based on a regional-manager system.
Each regional manager (all of whom have come up through the ranks)
is responsible for 10 to 15 stores. The managers report to a few
senior executives. Company ranks have swelled to more than 7,000,
yet there is little turnover within the supervisory and management
ranks. And Tower promotes from within; most managers started as
clerks.

As for the future: What's next? A superstore the size of an
airport? Solomon refuses to comment. One thing is certain: This
cantankerous entrepreneur says he'll never retire. That's
easy to believe, given his past record.

New York City writer Bob Weinstein is the author of 10 books;
his latest is Who Says There Are No Jobs Out There?, from
McGraw-Hill.